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Compendium of financing options for the food processing sector Investment Environment & Opportunities in Food Processing ANDHRA PRADESH Knowledge Partner National Event Partner Government of India Ministry of Food Processing Industries

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Page 1: Investment Environment & Opportunities in Food Processing ...foodprocessingindia.co.in/state-profile-pdf/andhra-pradesh.pdf · exports accounting for a 70 per cent share of the total

Compendium of financing options for the food processing sector

Investment Environment & Opportunities in Food Processing

ANDHRA PRADESH

Knowledge Partner National Event Partner

Government of India Ministry of Food Processing Industries

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Table of contents

State Introduction 2

Why Andhra Pradesh 2

Raw Material Base 3

Production Clusters 5

Agricultural Marketing 8

Processing Clusters 9

Infrastructure 12

State Government Initiatives 16

Snapshot of Investable Projects 19

References 22

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2

Investment Environment & Opportunities in Food Processing: Andhra Pradesh

*1 Million = 10 lakhs

**10 Million= 1 Crore

StateIntroductionAndhra Pradesh ranks as the 8th largest State in the country. Situated in a tropical region, the state has the 2nd longest coastline in the country with a length of 970 km. The state has a coastline of 974 km (605 mi) with jurisdiction over nearly 15,000 km territorial waters, the second longest among all the states of India after Gujarat.

With well-developed social, physical and industrial infrastructure, the state also has good power, airport, IT and port infrastructure. At current prices, Andhra Pradesh’s gross state domestic product (GSDP) was estimated at US$ 92.17 billion (2015-16) and average annual GSDP has grown at rate of 10.67 per cent between 2004-05 and 2015-16.

Andhra Pradesh- key highlights

State capital Amaravathi

Geographical area1 1.60 Lakh*Sq. Km Population2 (Census 2011)

4.90 Crores**

Gross state domestic product (GSDP)3

(at current price, base year 2011-12)

USD 87.7 Billion in 2014-15 at current price

Per capita income4

(Measured as Per Capita NSDP at current prices for 2013-14)

Per Capita Income (measured as Per Capita NSDP) at current prices for 2014 -15 was USD 1387. Percentage change in Per Capita Income over previous year was 11.20%.

FDI inflows5 USD 10.8 Billion- FY00-FY17 Total road length (kms)6 178081 km

Rail length (route kms)7 3703.3 Km Ports8 Six Airports9 Seven

Why Andhra Pradesh

Andhra Pradesh

Amaravati

The state is top ranked in marine exports in the country, contributes more than 70 per cent to the country’s total marine exports

Andhra Pradesh is one of the leading states in horticulture produce with nearly 2 million hectare (Ha) under different fruit crops.

State’s fertile river systems like Godavari, Krishna, Tungabhadra, and Penna can easily meet water needs of Agriculture and Food Processing Industry.

The State is ranked # 1 on Ease of Doing Business, as per World Bank and Department of Industrial Policy and Promotion ranking

1

2

3

4

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

Raw material base (1/3)

Andhra Pradesh is one of the leading food grain producing states in India, as well as one of the top rice producing states. The area under food grains is estimated to be 4.13 million hectares in 2015- 16. The total production of food grains in 2015-16 is estimated at 14.37 million tonnesThe leadingcrops produced in the state include Rice,MaizeChilly, Oilseeds, Cotton, Pulses.

The presence of rich climatic and soil conditions make Andhra Pradesh a major agricultural belt. The state is agrarian in character with over 60% of population dependent on agriculture. Furthermore, Andhra Pradesh is known as “the bejewelled rice bowl of India” as it is one of the top rice producing states of the country.

Four important rivers of India, the Godavari, Krishna, Penna, and Tungabhadra flow through the state, providing irrigation. Recently, crops used for vegetable oil production such as sunflower and peanuts have gained favor in the state. There are many multi-state irrigation projects in development, including Godavari River Basin Irrigation Projects and NagarjunaSagar Dam.

Andhra Pradesh is also one of the major contributors of marine exports accounting for a 70 per cent share of the total marine exports. It contributes around 4.01 per cent share to the cumulative Foreign Direct Investment (FDI) inflows of India.

SNAPSHOT OF LAND UNDER CULTIVATION12

Arable land 16500

Net sown area 10868

Total Cropped area 13625

(2013-14, ‘000 hectare)

Krishna Godavari Zone:East Godavari, West Godavari, Krishna, Guntur, and Prakasam.

North Coastal Zone:Srikakulam, Vizianagaram, Visakhapatnam and uplands of East Godavari

Southern Zone: Nellore, Chittoor, Southern parts of Prakasam and Kadapa and Eastern parts of Anantapur.

Scarce Rainfall Zone:Kurnool, Anantapur, Prakasam (western parts), Kadapa (Northern part),

High Altitude Tribal Zone: Northern borders of Srikakulam, Vizianagaram and Visakhapatnam and East Godavari.

Andhra Pradesh has been blessed with abundant natural resources such as sunlight, monsoonal rains, potential soils, perennial rivers for taking up systematic crop production. The cropped area in Andhra Pradesh is divided into five zones based on the agro-climatic conditions. The classification mainly concentrates on the range of rainfall received, type and topography of soils-

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

Total production of 144 Lakh* MT of food grains

o Paddy – 112 Lakh MT

o Maize – 14 Lakh MT

o Split Black Gram- 4.11 Lakh MT

o Green Gram – 1.37 Lakh MT

Total production of 157 lakh* MT of horticulture products

o Fruits – 10 million MT

o Vegetables – 5.4 million MT

o Spices – 1.1 million MT

Total production of 10.8 million MT of Milk

Andhra Pradesh stands first in sheep population (210.15 lakhs*), second in Buffalo

population (107.68 lakhs*), seventh in goat population (64.27 lakhs*), and eighth in cattle

(94.24 lakhs*) and pig population (5.4.9 lakhs*) in the Country

Raw material base (2/3)

Major strengths of Andhra Pradesh’s food processing industry lies in the following:

Cereals & Nutri-cereals- Rice, Maize, Small Millets

Pulses- Split Black Gram, Green Gram

Seed Spices-Ajwan (Ajowan caraway), Turmeric, Coriander, Chilies

Oilseeds-Groundnut, Sunflower

Fruits-Mango, Papaya, Banana, Coconut, Citrus

Vegetables- Pointed Gourd(Parwal), Okra, Tomato, Tapioca

Food Grains:Key production highlights (2015-16)

Horticulture products: Key production highlights (2015-16)

Livestock: Key production highlights(2015-16) 10

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

Andhra Pradesh is second largest producer of eggs with production of 15830 lakh* eggs

Fisheries contribute 10% of total fish and over 70% of the shrimp production of India

Eggs 15830 Lakh* Numbers Meat 5.5 Lakh* kg Milk 12.1 Million MT

Raw material base (3/3)

Poultry & Fisheries: Key production highlights(2015-16) 11

Rice 11200 Groundnut 802 Maize 1411

Banana 3570 Mango 2803 Papaya 987

Tomato 2236 Okra 225 Cucumber 91

CROPS (‘000 tonnes)

FRUITS (‘000 tonnes)

VEGETABLES (‘000 tonnes)

Livestock

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

The major production clusters12 of Andhra Pradesh are given below:

Geographical Indication for Agricultural& Food Products in AndhraPradesh1:

Banana

Kurnool, Kadapa, Anantpur, West Godavari

Rice

Guntur, Krishana, East Godavari, West Godavari

Sweet Orange

Prakasm, Kurnool, Kadapa, Anantpur

Okra

Kadapa, Kurnool, Anantapur, Chittoor

Turmeric

Visakhapatanam, Krishna, Guntur, Kurnool, Kadapa

Livestock

Guntur, Prakasm, Krishna, Chittoor

Sorghum( Jowar)

Prakasm, Kurnool, Kadapa, Guntur

Tomato

Chittoor, Kurnool, Kadapa, Anantpur

Production Clusters

Guntur SannamChilli

Banaganapalle Mangoes

Bandar Laddu (Food Stuff)

TirupathiLaddu (Prasadham)

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

Production Clusters

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

Agriculture marketing

Andhra Pradesh has the following marketing facilities13 in the state: Food Processing Units: More than 6000 food processing units are present in the state

Agri-Export Zones: Total of 03Agri-Export Zones, with focus on Mango pulp &

Vegetables, Mangoes and Chili have been identified by the State Government

There are 285 Agricultural markets in which 93 functional markets in the state divided

into commercial markets -15, Cattle Markets – 32, Vegetable Markets- 21 and, Fruit

Markets-21. These markets are managed by the state.

324cold storageunits are present in the state

In total 1060 Warehouses with storage capacity of 8.48 Lakh MT are present in Market

yards of the Department.

e-Trading has been introduced in 10 Markets on 13.10.2015. e-NAM has been introduced

in 12 markets under National Agricultural Market (NAM) with Agri Tech Infrastructure

Fund Scheme (ATIF) with financial assistance sanctioned by Govt. of India.

Agricultural markets in Andhra

Pradesh

03 Agri-export Zone

93 Funtional markets

managed by the state

324 Cold Storage

units1060

Warehouses with storage

capacity of 8.48 Lakh MT

More than 8500 food processing

units

10 markets under e-trading and 12 markets

under e-nam

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

Processing Clusters (1/2)

Spices and Condiments Processing

Guntur, Kadapa, Prakasham, Kurnool

Famous Ethnic Food of Andhra Pradesh

KandhiPodi: Red gram powder with spices

Pesarattu: Pancake made with Moong dal (green gram)

RagiSangati with NatuKodiPulusu: RagiSangati (Ragi Balls) served with the

chicken gravy made with free range chicken.

Pootharekulu, Bandar laddu (sweets)

Rice Mills

East Godavari, West Godavari, Nellore, Krishna

Bakery Products

Krishna, West Godavari, Nellore

Pulses Processing

Kadapa, Anantpur, Kurnool

Edible oils Processing

East Godavari, West Godavari, Kurnool, Nellore

Meat Processing

Krishna, Anantapur, Prakasham East Godavari

Mango jelly Cluster

East Godavari, Vizianagaram, West Godavari, Krishna

Turmeric Processing Cluster

Guntur, Prakasham, Kadapa, Krishna

Fish & Fishery Products

East Godavari, West Godavari Krishna, Nellore

Fruits Processing

Chittoor, Krishna, Kadapa

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

Government of Andhra Pradesh has identified 6 potential agri-processing clusters14 as follows:

Clusters : Districts Products Clusters : Districts Products

Srikakulam Zone(Srikakulam, Vizianagaram & Visakhapatnam)

Cashew, Sugarcane, Coconut, Mango

Prakasam Zone (Prakasam, Nellore)

Sweet Orange, Spices, Papaya, Shrimp Processing, Cashew nut

Godavari Zone(East Godavari, West Godavari)

Paddy, Coconut, Banana, Oil palm, Maize, Egg, Meat

Chittoor Zone(Chittoor, Kadapa)

Mango , Banana , Papaya, Groundnut , Sugarcane, Tomato, Onion, Milk

Guntur Zone(Guntur, Krishna)

Spices, Maize, Milk, Egg, Paddy

Anantapur Zone(Anantapur, Kurnool)

Groundnut, Sweet Orange, Papaya, Pomegranate, Tomato, Onion, Meat

Andhra Pradesh is a host to more than 8,500 companies in the food processing sector. An indicative of key companies and their district of presence in the state is given below.

Processing Clusters (2/2)

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

Processing Clusters

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

The status of key physical and agricultural infrastructure in Andhra Pradesh is as follows:

Parameter Status

Inland container depots* 12 (5 under implementation)

Existing Industrial Areas/ SEZs

Cold Chain units: Total– 66 EightMega Food Parks Four Special Economic Zones More than 6000 food processing companies

Commodity Based Cluster Development 15

Focus on commodity based cluster development to enable afocused and planned approach to developing the food processingindustry based on the food production strengths of respectivegeographies.

Food Parks developed, based on commodity produced in theidentified cluster will be prioritized.

Installed power16

(including allocated

shares in Joint &

Central Sector Utilities

as on 31 Mar 2017)

Thermal - 14258.68 MW, Nuclear - 127.27 MW, Hydro - 1747.93 MW, Res- 6164.42 MW

Utilities

Electricity cost 17 (Unit- kWh/kVah)

Upto 50 Units/Month – Rs. 5.40 /Unit Above 50 units/Month – Rs.6.63/Unit to Rs. 9.78 unit depending

upon unit consumption

Water rates18 Rs.103 /Kl

Infrastructure (1/2)

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

Industrial Areas & Food parks: A number of industrial areas and food parks are available in the state for investors keen on setting up food processing units in the state. The key food parks in the state include:

S. No.

Industrial Park Location Type (Multi/

single product), ETC.

Total Land Area Available

(in acres)

Mega Food Park

1 Srini Food Park Private Limited Chittoor Multi products 140

2 Andhra Pradesh Industrial

Infrastructure Corporation Ltd Mega Food Park

Krishna Multi products 100

3 Godavari Mega Aqua Food

Park Private Limited West

Godavari Multi products 57.81

4 Jain Irrigation systems Ltd. Kurnool Multi products 623

5 Nekkanti Mega Food Park Pvt.

Ltd. Nellore Multi products 52.22

6 SH Food Processing Pvt. Ltd. Prakasham Multi products 53.74

7 North Coastal Integrated Food

Park Pvt. Ltd. Vizianagaram Multi products 37.89

8 M/s. Vyshnavi Mega Food Park

Pvt. Ltd. Chittoor Multi products 100

Infrastructure (2/2)

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

9 M/s Sri Varsha Integrated

Food Park Pvt. Ltd. Kadapa Multi products 44.78

10 M/s Sri Chandana Integrated

Food Park Ltd. Vizianagaram Multi products 40

11 M/s Patanjali Food and Herbal

Park Pvt. Ltd. Vizianagaram Multi products 172.84

12 Aveena Mega Food Park Pvt.

Ltd. Anantapur Multi products 50

13 M/s North Andhra Mega Food

Park Pvt. Ltd. Srikakulam Multi products 60

14 M/s Safe n Fresh Integrated

Food ParkPvt. Ltd. Nellore Multi products 53.74

15 M/s Specialized SRK Foods Pvt.

Ltd. Chittoor Multi products 45

Special Economic Zones

1 SRI CITY PRIVATE LIMITED Chittoor Multi products 3799

2 PARRY INFRASTRUCTURE

COMPANY PRIVATE LIMITED West

Godavari Multi Products 250

3 KRISHNAPATNAM INFRATECH

PVT. LTD. Nellore Multi Products 2526

4 APIIC Ltd. Vishkapatnam Multi Products 3213.03

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

Infrastructure

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

State government initiatives (1/2)

Andhra Pradesh Food Processing Policy 2015-202019 Aim: “The State intends to be the most preferred destination for Food Processing Industry. The new Food Processing Policy aims to capitalize on the rich and diverse food production base of Andhra Pradesh to provide fillip to the sector.”

Develop commodity-based clusters to enable a focused and plannedapproach to developing the food processing industry through acoordinated approach between government departments.

Identify and bridge existing infrastructure gaps affecting the foodprocessing industry.

Promote innovation, research & development in the industry and ensurecontinuous technology up gradation.

Undertake capacity building and enhance competitiveness of foodprocessing industry in both domestic and international markets

The proposed policy’s targets are as follows:

Make Andhra Pradesh one of the most preferred destinations for foodprocessing sector

Attract new investments worth 5,000 crore by 2020. Create additional employment opportunity for 50,000 personnel by 2020

GoAP( Government of Andhra Pradesh) accords highest priority to improving

“Ease of Doing Business‟. Timely clearances and responsive post investment

facilitation services have been identified as the cornerstone for improving

business environment and boosting investor confidence.To that end, the state

shall provide both pre and post investment services to facilitate rapid

industrialization through the following:

Single Desk Clearance

Measures to simplify processes and procedures by utilizing spot

approvals,Deemed Approval based on self-certification , Assignment of

Inspection to Private Technical Experts

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

State government initiatives (2/2)

Key Highlight: Andhra Pradesh Food Processing Policy 2015-2020

Name of Policy Andhra Pradesh Food Processing Policy 2015-2020

Sector Agriculture, Horticulture, Animal, Husbandry and Dairy/ Poultry

Nodal Department Andhra Pradesh Food Processing Society (APFPS)

Capital Subsidy*

Subsidy to an extent of 25% of project cost for setting up new food

processing units limited to INR 5 Crores

Subsidy to an extent of 25% of equipment cost for technology up-

gradation of existing food processing units

limited to INR 1 Crore

Subsidy to an extent of 50% for setting up Primary Processing Centers

(PPCs) and Primary Collection Centers (PCCs) limited to INR 2.5 Crores

Subsidy to an extent of 35% for setting up of cold chain for

agriculture/horticulture /dairy /meat produce, limited to INR 5 Crores

Interest Rebate/Subsidy

Interest subsidy of 7% on the term loan taken for fixed capital

investment for food processing units and cold chain infrastructure for a

period of 5 years from commencement of commercial operations

limited to INR 2 Crores.

Interest subsidy of 7% on the term loan taken for Primary Processing

Centers (PPCs) and Primary Collection

Centers (PCCs) for a period of 5 years from commencement of

commercial operations limited to INR 1 Crore

Stamp duty & Reg. fee

exemption

100% reimbursement of stamp duty and transfer duty paid by the

industry on purchase or lease of land meant

for industrial use.

100% reimbursement of stamp duty for lease of land/shed/buildings,

mortgages and hypothecations

Electricity Duty

exemption

Electricity duty will be exempted for captive power plants for self-use,

for 5 years from the date of commencement of commercial operation

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

Land Related

Concession/Exemption

If conversion of land for setting up Food Processing unit is permitted

by the relevant government authority, Government of AP will

reimburse the Non-Agriculture Land Assessment (NALA) tax as

applicable

Reimbursement on

Transportation

Reimbursement of 30% of road transport charges till inland container

depot (ICD) / port for export of perishable

goods by food processing units with a ceiling of INR 5 lakh per annum

per unit for a period of 3 years from the date of

commercial production

Technology up-gradation

and R&D related

Incentives

Government of Andhra Pradesh will provide assistance to food

processing industries for research work approved by government

undertaken by reputed research institutions, up to 50% of the cost

with a ceiling of INR 25 lakhs. This would be a onetime grant for a food

processing unit

Link of policy document https://www.apindustries.gov.in/APIndus/Data/GO/Food%

20Processing%20Policy%2022052015-F%20Cabinet%20.pdf

Fiscal Incentives

Reimbursement of Power consumption charges @1.50 per unit for 5 years /Rs.1.00 per unit for Fish & Shrimp Processing units.

Reimbursement of Non-Agriculture Land Assessment (NALA) tax for theproduce purchased direct from farmers.

Reimbursement of 100% stamp duty, Transfer duty. VAT/CST/GST Reimbursement for micro & small enterprises (100%), medium

industries (75%) & Large Industry Units (50%) for 5-7 years

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

Snapshot of potential investable projects

Andhra Pradesh offers diverse set of investment opportunities in the food processing sector. An indicative list of potential projects for investments is presented below:

Project name Process-able

Products/ infrastructure

Value Proposition

1. Establishment of

Maize Value

Added Products

Unit

Maize& Rice Value added products from Maize& Rice

2. Setting up a Health

Drink

Manufacturing

Plant

Fruits (Banana, Mango,

Papaya, Citrus

varieties, Guava etc.

Project envisages setting up of Health drink

manufacturing plant, which can focus on

production, processing, packaging, export,

etc.

3. Establishment of

Fruit Processing

Unit

Fruits (Banana, Mango,

Papaya, Citrus

varieties, Guava etc.

Manufacturing unit focussing on pulp,

squash/ juices, jam & jellies, pickles, etc.

4. Medical Herbs

Extraction Unit

Herbs & Spices Extraction unit of extracting essences from

aromatic herbs and spices

5. Development of

IQF for fish &

Shrimp

Fish & Shrimp The project is essential as the state

government is trying to create new

infrastructure and projects for increasing

the fish and shrimp production. As the

production increases there will be need for

processing facilities and IQF is one of the

basic processes required

6. Whey and Casein

Products

Whey and Casein The state is one of the largest producer of

milk and units developing products based

on milk but not the traditional products will

add to the demand for milk

7. Malting Unit Coarse Grains Malting is a good option for value adding to

coarse grains

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

8. Dehydrated

vegetable units

Vegetable (Tomato,

Okra, Tapioca, Pointed

Gourd Etc.)

A.P State has large scare production of the

vegetables like Tomato, Okra, Tapioca,

Pointed Gourd Etc. where the value

addition to be done

9. Waste Processing

Units

Waste products at

Cashew, Mango,

Banana, Papaya,

various Citrus varities

A.P state has 6000 food processing units

and there is a larger scope for processing

waste generated from the units

10. Food parks

• Ultra-Mega Food

Park

• Mega Food Park

• Integrated Food

park

Government of APhas attractive state Food

Processing Policy with best in class

schemes. The Subsidy by state government

ranges from INR 20 to 50 Crores ($3.05 to $

7.6 Millions) depending on the category of

food park

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

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Investment Environment & Opportunities in Food Processing: Andhra Pradesh

References

1https://data.gov.in/catalog/land-use-pattern 2http://censusindia.gov.in/ 3http://mospi.nic.in/sites/default/files/press_releases_statements/State_wise_SDP-28october2016.xls 4http://pib.nic.in/newsite/PrintRelease.aspx?relid=123563 5http://dipp.gov.in/sites/default/files/FDI_FactSheet_January_March2017.pdf 6Statistical Year Book India 2017, MOSPI (includes state highway, national highway, other PWD roads, rural roads, urban roads). 7As per Ministry of Railways press release it is 5258.49 km (As on 31.3.2016) 8http://www.ipa.nic.in/index1.cshtml?lsid=32 9http://www.ap.gov.in/wp-content/uploads/2017/03/SOCIO-ECONOMIC-SURVEY-2016-17.pdf 10http://apahd.gov.in/about_us/intro.html 11http://apahd.gov.in/about_us/intro.html 12http://mofpi.nic.in/sites/default/files/indicative_list_of_identified_agri-horti_production_clusters_fruits_vegetables_0.pdf 13http://market.ap.nic.in/index.html 14https://www.apindustries.gov.in/APIndus/Data/GO/Food%20Processing%20Policy%2022052015-F%20Cabinet%20.pdf 15https://www.apindustries.gov.in/APIndus/Data/GO/Food%20Processing%20Policy%2022052015-F%20Cabinet%20.pdf 16http://www.cea.nic.in/reports/monthly/installedcapacity/2017/installed_capacity-03.pdf 17http://www.aperc.gov.in/aperc1/assets/uploads/files/8389c-to_2017-18.pdf 18http://rwss.ap.nic.in/pred/downloads/SOR%202016-17.pdf 19https://www.apindustries.gov.in/APIndus/Data/GO/Food%20Processing%20Policy%2022052015-F%20Cabinet%20.pdf

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TRANSFORMING THE FOOD ECONOMY 3-5 November, 2017 | Vigyan Bhawan, New Delhi, India

About World Food India A global event to facilitate partnerships between Indian and international

businesses and investors, World Food India (WFI) is a gateway to the Indian food economy and an opportunity to showcase, connect, and collaborate.

Write to us at:

Ministry of Food Processing Industries, Government of India Panchsheel Bhawan, New Delhi, India.

Telephone Number: +91 11 -26492216/ 26492174/ 26493227/ 26490933 Find us at: http://mofpi.nic.in/

https://www.worldfoodindia.in/